Musk’s Support for Republican Causes Started Years Ago
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Elon Musk's financial support of Republican causes goes farther back in time and is more extensive than we knew.

Plus, Israel launches a strike in the capital of Lebanon, killing six people. And small businesses in the U.S. are adjusting to a looser monetary policy environment. For these companies, because they also have more limited cash reserves, a rate cut can make a big difference.

It's Thursday, October the 3rd. I'm Azhar Sukri for The Wall Street Journal, filling in for Luke Vargas. Here is the AM edition of What's News, the top headlines and business stories moving your world today.

We are exclusively reporting that Elon Musk has been supporting Republican causes for far longer and more extensively than had been previously known. According to people familiar with his involvement and from tax filings...

In the fall of 2022, more than $50 million of his money funded ads by a group called Citizens of Sanity. The group has ties with Stephen Miller, who was a senior aide to the Trump administration. Most of the ads ran in battleground states days before the midterm elections and attacked Democrats on issues like medical care for transgender children and illegal immigration.

The following year, Musk gave $10 million in support of Florida Governor Ron DeSantis as he ran for president, according to people familiar with his donation.

Representatives for Musk and DeSantis didn't immediately respond to requests for comment. The financial contributions show how Musk was a major force in funding Republican initiatives well before starting a super PAC in support of former President Donald Trump this year. They also make him one of the biggest donors to conservative causes.

Special Counsel Jack Smith's bid to kick-start a federal prosecution of Trump on election interference charges has taken a big step forward.

In a filing unsealed yesterday, Smith laid out a roadmap for allegations that the former president resorted to crimes to remain in power after losing the 2020 election. It amounts to a defense of the case even after a recent Supreme Court ruling that gave former presidents broad immunity for their acts while in office. Smith's team's argument is that Trump's plan to hang on to power...

was fundamentally a private one, leaving him open to prosecution. The Republican presidential nominee has pleaded not guilty and accused Smith of ignoring the Supreme Court. A Trump campaign spokesman called the court filing falsehood-ridden. We've broken down some highlights from the 165-page document on WSJ.com. We'll leave a link in our show notes.

An Israeli airstrike on the city of Beirut in the early hours of this morning has killed at least six people. That's according to Lebanon's health ministry. The Israeli military said it had conducted a precision strike in the Lebanese capital. It had released a notice warning residents to stay away from certain locations that it said were linked to the Hezbollah militant group.

Meanwhile, Israel's military said eight troops died in combat in Lebanon, the first soldier deaths in its invasion of the country. Hezbollah said the group's fighters were resisting the Israeli offensive and that it was preparing for a long battle. According to the Lebanese health ministry, at least 1,030 people have been killed in Lebanon since Israel intensified its attacks against Hezbollah there.

Coming up, the Fed's decision to cut rates jolts small businesses to start spending again. And we'll look at Domino's quest to revive sales with emergency pizzas. That's after the break.

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That's Techfluential, a podcast from Deloitte and custom content from WSJ. It's been just over two weeks since the Federal Reserve cut interest rates by half a percentage point, with more rate cuts expected in the months and years to come. And as Journal senior special writer Ruth Simon reports, some entrepreneurs are already preparing for lower borrowing costs.

Our Luke Vargas began by asking her why small businesses are likely to be some of the earliest and biggest winners when rates begin to fall. Well, let's think about two groups of small businesses. One is if you divide the world of publicly traded companies into big corporations and then smaller and mid-cap companies.

They tend to have more floating rate debt than their larger peers, and that means that the rate cuts will have a bigger impact on their borrowing costs. As a result, the Russell 2000 Index of small and mid-sized businesses has often outperformed the S&P 500 index.

after the Fed starts cutting rates. And then when you think about the very small companies, more of the mom and pop businesses that I often speak with, they don't even have the option of going to the equity market. And their debt costs also tend to be higher than for bigger corporations. And for these companies, because they also have more limited cash reserves, a rate cut can make a big difference.

Yeah. So what specifically are you hearing from small business owners? What plans are they making in response to the recent cut? Small businesses are really rethinking what they're doing. For instance, I talked to a business owner who has a gun safe company and he's going to do more consumer advertising because he thinks lower rates will be good for consumer optimism, make his customers more willing to spend. I also talked

to a small company that makes candles and she's thinking with interest rates lower, she may be able to afford to borrow to pay for a few extra people during the holiday season and to spend more in R&D. So if you think about it, some companies are thinking about what it means for their own operations and others are thinking, is this going to make my customers more willing to spend? Yeah, you spoke to some people in this piece

who have to be very creative in how they balance their books involving various lines of credit, credit cards to make things work. So even just a little more flexibility can go a long way. And I think when you think about the smallest companies, often they're using credit card payments to make ends meet. On the other hand, I talked to the owner of a tire and wheel store where he

really wants to grow his business and add new locations. His existing debt was refinanced before rates started going up, so higher costs didn't have as much of an impact on his ongoing operations.

But between higher interest rates and higher construction costs, it really had slowed down his growth plans. And for him, not just the current rate cut, but this notion that overtime rates will go down further, he's willing to move forward and start looking at new locations so he can expand his business.

And yet, while small businesses might see relief faster than other borrowers, not everyone is ready to predict that lower rates are going to materially affect their business just yet. Right. And so we did a survey with Vistage Worldwide, which is

has a membership group for small business owners. And one in four of the small business owners said that a rate cut of a quarter point or a half percentage point was going to be enough to have an impact on their business.

Other business owners are waiting for rates to go down further. I was talking to a company that does website work for small and mid-sized businesses. He thinks it's going to take a full percentage point reduction in interest rates for his customers who are small and mid-sized companies to start spending again because they can't afford to take added risk at these current rates.

So I think everybody is looking not just at this rate cut, but what are we going to see down the line? I've been speaking to Wall Street Journal senior special writer Ruth Simon. Ruth, thank you so much. Pleasure to speak with you.

And from small businesses to big chains, when Domino's lost its pandemic-driven momentum, it needed to fire up some new ideas to boost sales. And so, after a string of weak quarters, it cooked up the idea of the emergency pizza –

The deal rewarded members of the company's loyalty programme with a one-time free pizza to claim within 30 days of making a purchase. It was one of its biggest giveaways ever and took two years to launch.

Journal restaurants reporter Heather Haddon says it shows how much chains have come to rely on promotions to win over customers who've pulled back on restaurant visits. They did focus group testing and they talked to franchisees and their finance department had to sign off, asked their tech teams.

And in October 2023, they started running the promotion lasted till February earlier this year. They say it really benefited their business. So same store sales in the US increased compared to the previous year. They got about 2 million people to join their loyalty program. And that's what they really wanted to do. Because once people are in your loyalty program and you start getting points and coupons, they say these customers are stickier and become repeat customers. So

Domino's just recently said that they're going to run emergency pizza again. And so we should expect chains to keep doing this and hopefully they can try to run these deals profitably because that's what they really need for their businesses. And in news, moving markets today. Expectations of an imminent rate hike by the Bank of Japan are ferocious.

A BOJ board member today echoed remarks by the country's new prime minister, urging caution on rate hikes given the country's long history of deflation. Despite a recent uptick in inflation in Japan, consumer demand remains soft. The yen briefly weakened against the dollar to reach its lowest level in at least a month, while stocks rose, helping the Nikkei end the day nearly 2% higher.

And oil prices continue to tick up, with Brent crude futures rising more than 1% this morning amid ongoing fears of supply disruptions from the Gulf if tensions in the Middle East escalate further.

Among the stocks to watch today is Constellation Brands, with the maker of Corona beer reporting results against a tough backdrop for the wine and spirits industry. And finally, Americans are having fewer babies, and it's become an issue for politicians and policy makers.

We want to know what questions you have about America's falling birth rate and what it means for politics and the economy. Send a voice memo to WNPOD at WSJ.com or leave a voicemail with your name and location at 212-416-4328. We might just use it on the show.

And that's it for What's News for Thursday morning. Today's show was produced by Daniel Bach and Kate Bullivant with supervising producer Christina Rocker. I'm Azhar Sukri for The Wall Street Journal, filling in for Luke Vargas. We'll be back tonight with a new show. Until then, thanks for listening. MUSIC

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